Hillside issues $2,100,000 of 5%, 15-year bonds dated January 1, 2015, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $2,570,390.

Required:

1.

Prepare the January 1, 2015, journal entry to record the bonds issuance.

1.

Record the issue of bonds with a par value of $2,100,000 cash on January 1, 2015 at an issue price of $2,570,390.

2(a)

For each semiannual period, complete the table below to calculate the cash payment.

Par (maturity) value		Annual Rate		Year		Semiannual cash interest payment

2(b)

For each semiannual period, complete the table below to calculate the straight-line premium amortization. (Round "Unamortized Premium" to whole dollar and use the rounded value for part 4 & 5.)

Bond price		Par (maturity value)		Premium on Bonds Payable		Semiannual periods		Straight-line premium amortization
			=

2(c)

For each semiannual period, complete the table below to calculate the bond interest expense.

Semiannual cash payment		Premium amortization		Bond interest expense
			=

3.

Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life.

Total bond interest expense over life of bonds:
Amount repaid:
	payments of
Par value at maturity
Total repaid			0
Less amount borrowed
Total bond interest expense			$0

4.

Prepare the first two years of an amortization table using the straight-line method

Semiannual Period-End	Unamortized Premium	Carrying Value
01/01/2015
06/30/2015
12/31/2015
06/30/2016
12/31/2016

5.	Prepare the journal entries to record the first two interest payments.
	1. Record the first interest payment on June 30, 2015. 2. Record the second interest payment on December 31, 2015.